Pillsbury Winthrop Shaw Pittman

New custody compliance tasks for California registered advisers effective 1 April

By Ildiko Duckor and Jay B Gould

The California commissioner of business oversight recently amended California’s custody rule 10 CCR section 260.237. The new custody rule will be effective on 1 April 2014.

All investment advisers licensed or required to be licensed in California must comply with the new custody rule. California-exempt reporting advisers are not affected.

‘Having custody’ refers to holding or having authority to obtain possession of client funds or securities, for example: possession of client funds or securities unless received inadvertently and returned to the sender promptly; any arrangement (such as a general power of attorney) that authorises you to withdraw client funds or securities maintained with a custodian by instructing the custodian; any capacity with authority to access client funds or securities (such as general partner of a limited partnership, managing member of a limited liability company or trustee of a trust)…

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